Economists worry that the tax incentive competition solicited by Amazon for HQ2 will divert taxpayer funds from education, infrastructure, and other priorities
New York TimesBen Casselman
Context & Ripple Effects
Amazon turned its second-headquarters search into an auction: 238 municipalities submitted bids offering tax breaks, free land, and special access to public resources. Economists' concern, reported here, is that the competition itself — not any single deal — pulls taxpayer funds away from education and infrastructure as cities try to outbid each other.
Cities competing for HQ2 are committing taxpayer funds — tax abatements, land, and public resources — that economists say directly competes with education and infrastructure budgets.
Second-order effects
The auction dynamic rewards Amazon with escalating concessions: New York's $1.5B-plus package set a benchmark other jurisdictions must match or exceed to win comparable anchor employers.
Third-order effects
If the pattern holds, corporate site selection becomes a standing auction that shifts bargaining power from governments to large employers, prompting political backlash — as seen in the objections to the Queens deal — and pressure to curb incentive competitions.
The trend: Major corporate siting decisions are becoming competitive auctions of public incentives, concentrating leverage with the employer and straining municipal budgets until political resistance forces a reckoning.
Accommodating HQ2 will require more teachers, wider roads & more housing. The costs for those upgrades will fall on residents and existing businesses. via @bencasselman http://www.nytimes.com/...
.@SteveCase to 300 U.S. mayors: “You might not have gotten the 50,000 jobs from Amazon's second headquarters, but you can create 50,000 jobs by backing startups, some of which can be the Amazons of tomorrow” http://www.bizjournals.com/... #RiseOfRest #AmazonHQ2 http://twitter.com…
#AmazonHQ2 is setting back the practice of economic development by decades. And the real tragedy is that this is being driven mainly by progressive Democrat mayors who know better. http://twitter.com/...
A lot depends upon Amazon's final decision, and how it is interpreted. Amazon's RFP both invited incentive competition, and also stated strong priorities for access to real estate and talent. Amazon's decision MAY suggest its priorities, but may also be open to interpretation. ht…
U.S. cities and states finally seemed to be learning the lesson that tax incentives aren't good economic-development policy. Then Amazon HQ2 came along. http://www.nytimes.com/... http://twitter.com/...
“The stakes are getting higher and the deals are getting worse for the taxpayer.” @amy_liuw on a national trend that mirrors what we've seen over recent years in NJ. Overall, this is a must-read piece by @bencasselman on the #AmazonHQ2 begging war. http://twitter.com/...
Good read on the incentive wars brewing over #AmazonHQ2. One quibble, the billions (with a B) will mostly come from states, not cities. http://twitter.com/...
“There are no incentives for those of us who are already here,” — hardware store owner who's grown to 12 locations & is now watching her city propose to hand big subsidies to Amazon. http://twitter.com/...